What we're saying is that instead of waiting 30 to 45 days
to pay your distributor, you can save money by buying directly
from us and pay cash at the time you buy.
buying directly from us and pay cash at the time you buy.
Let me tell you something. Everything that's
happened in the marketplace, in the video game
business, elsewhere in the world, has eventually
happened here in the United States. You had copy
games going all around the world, and everybody said it
couldn't happen here in the United States, and it
ultimately happened here in the United States. They said
the same thing about cocktail games in this country, but
cocktail tables became a large part of the market here in
the United States. Then they said you couldn't sell a kit
here in the United States, even though kits were being
sold everywhere else. And ultimately we were selling
conversion kits in the United States. In every other
market in the world, video games are sold, basically,
direct from the manufacturer to the operator. It's in
Japan. It's in the U.K. And it's in Europe.
PLAY METER: But while the distributor network in
other countries may be called into question as far as
video game conversions-in this country we span four .
time zones. Doesn't this vast geographical spread make
it difficult, if not impossible, for a manufacturer to
represent his company, especially if his company is
based in Florida and his customer is in, say, Oregon?
KAMINKOW: How many operators never go in to
their distributors? A lot. And all they see from them is a .
piece of mail or a postcard or a telephone call. The fact
that distributors sell out of their territories seems to
indicate that this geographical expanse is not so
important after all. Some distributors used to laugh and
tell me their territory was 360 degrees-in all directions.
But, back to what I was saying, I feel in the long run
what has happened in every other part of the world, in
the video segment of this industry, will happen in the
United States. The direct sale to the operator, offering
quality product at a substantially lower investment to
him, will bring back and make the industry, as far as the
video game segment, a lot stronger so we can maintain
the base. You have to remember, in 1978, there were
anywhere between 50,000 and 75,000 video games in
place in the United States. Tops. In 1981-1982, at the
height of the video game boom, it was estimated to be
anywhere between 1.2 to 1.4 million video games on
location. Today, on the conservative side, even if there's
only 800,000 video games left, there's substantially more .
there than there were in 1978. The base is so much
higher. Even if there are only 500,000 video games, it's
still a thousand ti~es more than in 1978. So there are still
more players playing video games, interested in playing
games, than we had before the boom.
Another important fact you have to consider is that,
between 1981 and 1983, we had to contend with the
consumer market, the home games. With many of the
new games that were coming out, within six months, the
home game versions were out, and that hurt the games in
the arcades. But, now, I believe the consumer business is
finished with. All the 2600's and the 5200's and all the
90
Colecovisions and the Intellivisions are gathering dust.
You look in the newspapers, and you can see the
closeout prices on game cartridges. They're trying to
dump their inventories, as low as a dollar a game. So I
don't see anybody muddying the waters, making a major
investment, trying to market video cartridges. The cost
is too much now to manufacture and market the games
today; so what I'm getting to is you're going to see people
who want to play video games going back to the arcades
and to the street locations. We're still in the
entertainment business, anyway you look at it. And,
when you eliminate the consumer business that was
taking' dollars away from us, you're still looking at a base
of games that constitutes a very large business. We're
still taking in a lot of dollars.
PLAY METER~ I have one last question about your
usurping the distributing role in your "Direct
Connection" marketing approach. We hear that the
distributor plays the role of counselor to his operators.
Do you see Centuri fulfilling that void?
KAMINKOW: Absolutely. I think by bringing the
operator high-quality, top-earning equipment to the
marketplace, I can help him better th~ that. When I
came into this business in 1962, I learned one thing. You
can talk all the gibberish in the world, but the whole
industry boils down to three words-cashbox,
cashbox, cashbox. Regardless of product, all that
matters is what's in the cashbox. If you provide product
that fills up the cashbox, it's going to be sold, whether it's
from distribution or whether it's direct from the
manufacturer. Or whether it's from a guy walking around
from door to door trying to sell -direct to an operator.
You talk about counseling. The operators left in this
business know their way around. All the new people who
came into the business during the boom have left the
business. We found an interesting thing on the cards that
the operators filled out at our booth at the show in
Chicago. We took close to a thousand cards and, in
analyzing those cards, we found that most operators
who filled them out have been in business for more than
seven years. The guys who came in during the boom,
most of them, are gone. What you've got left are the
hardcore operators, who's been there, who already
knows what he needs. ~'s got a route. He's got video,
pool tables, cigarette machines, jukeboxes, shuffles.
You're back to the basics.
PLAY METER: Are you still a member of the
Amusement Game Manufacturers Association
(AGMA)?
KAMINKOW: No. Just prior to the show, because
of our "Direct Connection" approach, we felt it was
inapropos for us to belong to the manufacturers/ distribu-
tors association. We just didn't feel it was proper. We
were supporters of the association for the things they did
when we were members, but we feel by going direct we
are now members of the operators' association.
•
PlAY METER. December 31, 1984